The Japanese yen follows risk appetite trends that follow the progress on a possible Greek bailout.

The British Pound is set to fall in with broad trends in risk sentiment as the economic calendar fades from view after the Bank of England firmly confirmed a dovish medium-term posture in its quarterly inflation report.

Despite further evidence of potential deflation, we may not see any action from the SNB as the country’s markets close for Carnival.

The Greeks are in a jam. The Hellenic deficit has risen to 12.7% of GDP, sending the cost of funding to nearly 7% for a 10-year loan. As the cost of money rose, so did Greece’s troubles. Each additional basis point of borrowing cost pushed the budget further out of balance.

The inflation numbers are coming in higher than expected. At some point, Mr. Bernanke will have to raise rates to stop inflation. But we suspect that that will not happen any time soon. We have a depression to live through first.

What type of reaction has the euro had to the Greek bailout?

The Greeks are in a jam. They spent too much money in the bubble years. Then, they saw their tax revenues disappear in the bust.

A credit swap is like an insurance contract.

Both California and Greece borrow long-term at about the same rate -- around 6%. Lenders know that when their backs are to the wall, both governments will have only two choices, not three. They can cut spending. Or, they can default.

The government would love to have some inflation. Trouble is, inflation is harder to conjure up than you might think.